Family offices option for all if money is legitimate, Lee says
Hong Kong welcomed the “man in the street” to set up a family office as long as the money was legitimate, Chief Executive John Lee Ka-chiu said yesterday amid recent controversy over a Dubai prince’s commitment to investing in the city.
Lee also stressed the financial hub must avoid being passive in efforts to attract “super-valued” asset owners to set up family offices, as many locations were competing for such business.
“They create very strong positive economic and financial benefits to the city,” he said in response to a question from the Post before his weekly Executive Council meeting. “We will do our best to invite as many to come, and provided that the money is legitimate money, we welcome it, whether he is a man in the street or he comes from a wealthy family or it is a sovereignty fund.”
Sheikh Ali Rashed Ali Saeed Al Maktoum was thrust into the media spotlight after he pledged to open a US$500 million family office in Hong Kong. He was at first reported to be a nephew of Dubai’s ruler and prime minister of the United Arab Emirates, but was later identified as a member of a distant family branch.
He attracted further public attention when he called off the inauguration ceremony for the office at the eleventh hour, which sparked questions about his commitment to the investment.
The Post also reported that Maktoum had an alter ego as a singer-songwriter known as Alira, popular in the Philippines, before he began shifting from a performer to a sustainability focused investor last year. During a second visit to the city last month, he spoke at a session of the Wealth for Good in Hong Kong summit.
Government sources earlier said only “basic” checks were performed before the sheikh’s engagement as they feared a stringent review might offend the VIP.
The sheikh later issued several statements repeating his commitment to the plan, which was postponed to the end of May.
Without naming Maktoum, Lee said authorities should balance benefits against risks when they approached family offices.
“Overall, provided the money is legitimate money, I think we should take all reasonable action to attract them to come.”
Lee said the city had done a lot to improve its attractiveness to the super-rich, such as offering tax concessions to family offices.
Last year, the government announced plans to develop a “conducive and competitive environment” for such businesses by introducing a range of measures aimed at fostering their growth.
Among them was an exemption from a 16.5 per cent tax on profits generated from global stocks, bonds and other qualified investments by family offices set up in Hong Kong.
To qualify, the firms must have an investment portfolio valued at HK$240 million, two employees in the city who are not required to be locals and annual operating expenses of at least HK$2 million.
Financial Secretary Paul Chan Mo-po said in his budget speech last year that the government had allocated HK$100 million to promote family offices and other wealth-management businesses.
The website and LinkedIn page of Maktoum’s private office in Dubai were found to be no longer accessible last Wednesday. The former was online the next day, but both pages were offline yesterday, when the sheikh was seen at a Web3 summit in Dubai.